Study of Marketing of Dairy Products 2020-21

PROJECT REPORT
ON
DAIRY PRODUCTS

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 Study of Marketing of Dairy Products 2020-21

1. Introduction of Dairy Sector :

1.1 India is endowed with a largest livestock population in the world having a total bovine
population of 304 million compared to the world's total bovine population of 1400 million. It
accounts for 57.3% of the world’s buffalo population and 14.7% of the cattle population. As per
th
18 Livestock Census, 2007 the country has 33.06 million cross bred cattle, 199.07 million
indigenous cattle and105.34 million buffaloes. The cross bred cattle are predominant in
Tamil Nadu, Maharashtra, West Bengal, Karnataka, Andhra Pradesh, Uttar Pradesh and Bihar,
While buffaloes are very common in Uttar Pradesh, Rajasthan, Andhra Pradesh, Madhya
Pradesh, Gujarat, Punjab, Haryana and Bihar.
1.3 There has been a major improvement in milk production, which increased from 17 million
tonnes in 1951 to 127.9 million tonnes during 2011-12. Uttar Pradesh, Punjab, Madhya Pradesh,
Rajasthan, Maharashtra, Gujarat, Andhra Pradesh, Haryana, Tamil Nadu and Bihar contributed
to the extent of 80 percent of the total milk production in the country. The per capita availability
of the milk has reached a level of 290 grams per day during the year 2011-12, which is more
than the world average of 284 grams per day. Most of the milk in the country is produced by
small, marginal farmers and landless laborers.
1.4 Recognizing the importance of the sector, several key initiatives were taken by the Govt.
in the past ranging from Operation Flood (OF) programme, Intensive Dairy Development
Programme (IDDP), Strengthening infrastructure for Clean Milk Production, Assistance to
Cooperatives, Venture Capital Fund (VCF) for Dairy, Dairy Entrepreneurship Development
Scheme etc.
1.5 In order to meet the rapidly growing demand for milk with a focus to improve milch
animal productivity and increase milk production, the Government has approved National Dairy
Plan Phase-I (NDP-
I) in February, 2012 with a total investment of about Rs.2242 crore to be implemented from
2011-12 to 2016-17. NDP-I will help to meet the projected national demand of 150 million tons
of milk by 2016-17 from domestic production through productivity enhancement, strengthening
and expanding village level infrastructure for milk procurement and provide producers with
greater access to markets. NDP-I would focus on

14 major milk producing States - Uttar Pradesh, Punjab, Haryana, Gujarat, Rajasthan, Madhya
Pradesh, Bihar, West Bengal, Maharashtra, Karnataka, Tamil Nadu, Andhra Pradesh, Orissa and
Kerala which account for over 90% of the country’s milk production. 1.5-2 per cent of the

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 Study of Marketing of Dairy Products 2020-21

milk allowed to ripen until its acidity comes to 0.19-0.2 percent. Hensor’s
powdered rennet is used @2.5-3 gms. for hundred liters of milk. The renneted milk is allowed to
set till the curd attains consistency similar to that required for cheddar cheese making. It is then
cut into cubes, which is left undisturbed for five minutes. The curd is then cooked gradually to
raise its temperature to 39º C and kept at this temperature for 10 minutes with constant stirring.
The temperature of the content of the vat is raised another 10 minutes, which is then lowered to
34-35º C by circulation of cold water.

The cooked curd particles are gathered at the end of the vat and allowed to settle down at
the bottom of the vat. The vat is then covered with lid and its content left undisturbed for 8-10
hours, until the acidity of whey increases to 0.4-0.45 per cent, while temperature is maintained
34-36º C. The whey is drained off and curd block is then stripped into long pieces and passed
through milling machine to get small cubes of desired size. The sliced curd is uniformly spread
in vat and washed with hot water for 4-5 minutes taking care that the curd cubes hould not float
in water. The hot water is drained; washed curd is filled in hoops of 35 x 28x 10 cms. Size and
then pressed. The block of cheese is then obtained, smeared with salt mash and left in the cold
Storage (5-10º C and 90 per cent relative humidity) for 48 hours. The block is turned once and
smeared with salt as before at the end of 24 hours. After salt simmering and initial drying for 48
hours the cheese is immersed in 18 per cent brine solution prepared by mixing pasteurized whey
and water in the proportion of 2:1 and calculated amount of salt. It is allowed to continue for 12-
15 hours in humidity controlled Room at 15-16º C and 10 percent R.H. During this process the
upper surface of floating block cheese is sprinkled with dry salt on alternate days. The cheese
blocks are then removed and left to dry at the same temperature for 2- 3 weeks. Subsequently
these are washed with water at 50º C, dried, Para finned and kept in cold storage for another 4-5
weeks for further ripening. Total time for ripening is about 8-9 weeks.

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 Study of Marketing of Dairy Products 2020-21

2. MILK PROCUREMENT AND PROCESSING:

The organized dairy sector (both cooperatives and private) is presently handles about 15 per cent
of total milk production in the country. Thus it indicates, there is a wide scope for processing of
milk and manufacture of milk products for domestic consumption as well as export.

3. EXPORT PERFORMANCE:

Dairy products form one of the fastest growing segments in the livestock product export. India's
Export of Dairy products was 159228.52 MT to the world for the worth of Rs.3318.53 crores
during the year 2013- 14.The major export destinations are Bangladesh, Egypt, UAE, Algeria,
Yemen Republic, Pakistan, Saudi Arabia and Malaysia. The major products exported were
Butter & other milk fat, cheese, Whole Milk Powder, Skimmed Milk Powder, fresh cream, ghee,
butter milk etc.

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 Study of Marketing of Dairy Products 2020-21

4. OBJECTIVES OF THE PROJECT:

The financial assistance is extended for processing of milk with the following objectives.

i) To enhance the keeping quality of milk

ii) To avoid the economic losses to farmers by procuring the milk in time from them

iii) To manufacture various milk products as per market demand

iv) To provide quality products at affordable prices to the consumers.

Recent study shows that India is the largest producer of milk in the world which is nearly
10% of the world production. Various milk-based products which can be manufactured
commercially in a rural industry are Paneer (Cheese), Dhahi (Curd), Ghee etc. These products
can be manufactured by low cost traditional methods and machineries. This kind of industries
can be located in area where abundance quantity of milk is available. The cost of these products
would be considerably low compared to those of big companies. A good number of employment
generations is possible with low investment.
Milk and its products are the essential item of daily life in our country especially majority of
Indians are vegetarian and thus milk and milk products are indispensable to Indians. The per
capita consumption was 122 gms. Per day in 1979 against an availability of 281 gms. Today per
capita consumption as well as production quantity has increased and there is a need to make
available milk and milk products to the people at reasonable price which can be attained only by
setting small scale model dairy units in different milk producing areas to cater to the local needs.
There is a challenge of multi-national companies paying major role in this industry. So it would
be better for rural industries to produce milk products with a traditional tinge.
Rural industries can market their dairy products through Co- operative marketing channels.
So that there product will no way get compared with that of large industries.
Paneer (Cheese) – There are different types of Cheese produced commercially, but the
process given below is of Cheddar cheese made from buffalo milk. The raw buffalo milk should
be preferably fresh and bacteriologic ally sound. The standardized milk is pasteurized at 71º C
for 5 minutes and subsequently cooled to10ºC. The pasteurized milk is inoculated with suitable
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 Study of Marketing of Dairy Products 2020-21

culture of desired quantity and milk is then held at 8- 10ºC for about 12 hours. The milk is then
transferred to sterilized cheese vats for further processing where the temperature is raised to 34-
35º C by circulating hot water in the jacket. A 40 per cent solution of Calcium chloride is added
@ 15 ml. per hundred liters of milk, which is followed by the addition of starter culture.

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 Study of Marketing of Dairy Products 2020-21

5. Data analysis and Interpretation

PARTICULARS ABOUT THE PROMOTER

1. Name : Jaysing Pralhad Nikam

2. Address : At Post: Mudshingi, Tal: Karvir, Dist: Kolhapur.

3. Contact Number : 8600574074

4. Age : 59

5. Educational Qualification : Graduate

6. Experience : 15 Year

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 Study of Marketing of Dairy Products 2020-21

COST OF PROJECT
PARTICULARS EXISTING PROPOSED AMOUNT
1. Fixed Assets 0.00 1200,000.00 1200,000.00
2. Current Assets 0.00 0.00 0.00
3. Working Capital Requirement 0.00 800,000.00 800,000.00
0.00 2,000,000.00 2,000,000.00

MEANS OF FINANCE
PARTICULARS EXISTING PROPOSED AMOUNT
1. Own Capital 0.00 500,000.00 500,000.00
2. Current Liabilities 0.00 0.00 0.00
3. Term Loan 0.00 1,500,000.00 1,500,000.00
0.00 2,000,000.00 2,000,000.00

Fixed Assets Includes Cost in Rs.

1. BMC 280000.00
2. Mawa making machine 88000.00
3. Cream Separator 39000.00
4. Dee Fridge 80000.00
5. Milk Vending Machine 184000.00
6. Milk Testing Machine Set 100000.00
7. Submersible 50000.00
8. Office Furniture 50000.00
9. Laptop 35000.00
10. Miscellaneous (Cane, Drums etc.) 50000.00
11. Generator 244000.00
Total 1200000.00

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 Study of Marketing of Dairy Products 2020-21

COST PRICE OF ITEMS ANNUALLY

NAME OF ITEM AMOUNT IN RS

1. Fresh Milk 700000
2. Others 100000

Total 800000

* Average Rate includes cost of transportation & packing.

SALES REALIZATION ANNUALLY

NAME OF ITEM AMOUNT IN RS

1. Milk 500000
2. Ghee 50000
3. Dahi 100000
4. Mawa 200000
5. Paneer 50000
6. Milk byproducts 30000
Monthly Total 930000
Annual Total 2,976,000.00

SATFF SALARY NO SALARY PER MONTH AMOUNT

1. Manager 1 15000 15,000.00
2. Salesman 1 10000 10,000.00
3. Others 2 8500 17,000.00

Total 42,000.00

Salary per year 504,000.00

Other Expenses (Per month) AMOUNT

1. Stationery Expenses 1000
2. Rent 10000
3. Electricity Expenses 15000
4. Insurance expenses 7500
5. Misc. Expenses 2500

Total 36,000.00

Expenses per year 432,000.00

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 Study of Marketing of Dairy Products 2020-21

PROJECTED PROFITABILITY STATEMENT

(Figures in Lakh")
ITEM (A) 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR

SALES 29.76 32.74 36.01 39.61 42.58 46.84

Total 29.76 32.74 36.01 39.61 42.58 46.84

B. EXPENDITURE

cost of Items 8.00 8.80 9.68 10.65 11.71 12.88

Staff Salary & Labour Exp. 5.04 5.04 5.54 6.10 6.71 7.38
Other Expenses 4.32 4.32 4.75 5.23 5.75 6.32
Interest on Term Loan 0.45 1.55 1.17 0.80 0.42 0.07
depreciation 0.42 0.26 0.19 0.15 0.12 0.11
Total 18.22 19.97 21.34 22.92 24.72 26.76

Profit (A-B) 11.54 12.76 14.67 16.69 17.86 20.08

Income Tax 3.46 3.83 4.40 5.01 5.36 6.02
Profit after Tax 8.08 8.94 10.27 11.68 12.50 14.05

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 Study of Marketing of Dairy Products 2020-21

PROJECTED BALANCE SHEET

(Figures in Lakh")
PARTICULARS 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR

LIABILITIES
Capital 0.00 11.08 18.01 25.28 32.96 42.47
Add : Addition 5.00 0.00 0.00 0.00 0.00 0.00
Add : Profit after tax 8.08 8.94 10.27 11.68 12.50 14.05
13.08 20.01 28.28 36.96 45.47 56.52
Less : Drawing 2.00 2.00 3.00 4.00 3.00 2.00
11.08 18.01 25.28 32.96 42.47 54.52

LOAN LIABILITIES

Term Loan 15.00 15.00 15.00 15.00 15.00 15.00

Creditor 8.00 9.00 10.00 10.00 12.00 12.00
34.08 42.01 50.28 57.96 69.47 81.52

ASSETS
Fixed Assets 1.58 1.32 1.13 0.98 0.85 0.75
(Less Depreciation)

CURRENT ASSETS
Stocks 15.00 16.50 18.15 19.42 20.78 22.23
Debtors 12.00 13.00 14.00 15.00 17.50 20.00
Cash & Bank Balance 5.49 11.19 17.00 22.57 30.34 38.54

34.08 42.01 50.28 57.96 69.47 81.52

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 Study of Marketing of Dairy Products 2020-21

DEPRECIATION SCHEDULE

COMPUTATION OF DEPRECIATION ON W.D.V. METHOD.

(Figures in Lakh")
YEARS FURNITURE EQUIPMENTS LAPTOP TOTAL
10% 15% 60%

1 YEAR 0.80 0.85 0.35 2.00

Less : Dep 0.08 0.13 0.21 0.42

2 YEAR 0.72 0.72 0.14 1.58

Less : Dep 0.07 0.11 0.08 0.26

3 YEAR 0.65 0.61 0.06 1.32

Less : Dep 0.06 0.09 0.03 0.19

4 YEAR 0.58 0.52 0.02 1.13

Less : Dep 0.06 0.08 0.01 0.15

5 YEAR 0.52 0.44 0.01 0.98

Less : Dep 0.05 0.07 0.01 0.12

6 YEAR 0.47 0.38 0.00 0.85

Less : Dep 0.05 0.06 0.00 0.11

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 Study of Marketing of Dairy Products 2020-21

PROJECTED FUND FLOW STATEMENT

(Figures in Lakh")
PARTICULARS 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR

SOURCE OF FUND
Own Contribution 5.00 0.00 0.00 0.00 0.00 0.00
Net Profit 8.08 8.94 10.27 11.68 12.50 14.05
Term Loan 15.00 0.00 0.00 0.00 0.00 0.00
Depreciation 0.42 0.26 0.19 0.15 0.12 0.11
Creditor 8.00 1.00 1.00 0.00 2.00 0.00
36.49 10.20 11.46 11.83 14.63 14.16

APPLICATION OF FUNDS
Increase in fixed assets 2.00 0.00 0.00 0.00 0.00 0.00
Increase in Stocks 15.00 1.50 1.65 1.27 1.36 1.45
Debtors 12.00 1.00 1.00 1.00 2.50 2.50
29.00 2.50 2.65 2.27 3.86 3.95

Opening Balance 0.00 5.49 11.19 17.00 22.57 30.34

Cash Surplus/ Deficit 7.49 7.70 8.81 9.56 10.77 10.20
7.49 13.19 20.00 26.57 33.34 40.54

Closing Balance 5.49 11.19 17.00 22.57 30.34 38.54

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PROJECTED DEBT SERVICE COVERAGE RATIO

STATEMENT

(Figures in Lakh")
Particular 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR

SOURCES OF FUND

Net Profit 8.08 8.94 10.27 11.68 12.50 14.05

Depreciation 0.42 0.26 0.19 0.15 0.12 0.11
Interest on T/Loan 0.45 1.55 1.17 0.80 0.42 0.07

TOTAL 8.94 10.75 11.63 12.63 13.05 14.23

DEBTS TO SERVICE

Repayment of T/Loan 0.75 3.00 3.00 3.00 3.00 2.25

Interest on T/Loan 0.45 1.55 1.17 0.80 0.42 0.07

TOTAL 1.20 4.55 4.17 3.80 3.42 2.32

DSCR 7.48 2.36 2.79 3.33 3.81 6.13

Average DSCR 2.80

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 Study of Marketing of Dairy Products 2020-21

PROJECTED INTEREST CALCULATION & REPAYMENT SCHEDULE

INTEREST ON TERM LOAN (Rs. In 'Lakh')

YEARS QTRS. OPENING REPAYMENT BALANCE QUARTE YEARLY

R INT.
INTERES @ 12.5%
T

1 YEAR 1st 0.00 0.00 0.00 0.00

2nd 0.00 0.00 0.00 0.00
3nd 0.00 0.00 0.00 0.00
4th 15.00 0.75 0.75 14.25 0.45 0.45

2 YEAR 1st 14.25 0.75 13.50 0.42

2nd 13.50 0.75 12.75 0.40
3rd 12.75 0.75 12.00 0.38
4th 12.00 0.75 3.00 11.25 0.35 1.55

3 YEAR 1st 11.25 0.75 10.50 0.33

2nd 10.50 0.75 9.75 0.30
3rd 9.75 0.75 9.00 0.28
4th 9.00 0.75 3.00 8.25 0.26 1.17

4 YEAR 1st 8.25 0.75 7.50 0.23

2nd 7.50 0.75 6.75 0.21
3rd 6.75 0.75 6.00 0.19
4th 6.00 0.75 3.00 5.25 0.16 0.80

5 YEAR 1st 5.25 0.75 4.50 0.14

2nd 4.50 0.75 3.75 0.12
3rd 3.75 0.75 3.00 0.09
4th 3.00 0.75 3.00 2.25 0.07 0.42

6 YEAR 1st 2.25 0.75 1.50 0.05

2nd 1.50 0.75 0.75 0.02
3rd 0.75 0.75 2.25 0.00 0.00 0.07

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